Markets may open negative in line with global cues

The markets may open negative in line with global cues. The SGX Nifty is trading down by 27 points at 5321 indicating a gap down opening to markets.

Overnight U.S. stocks slumped amid growing concern that European leaders will struggle to raise funds to contain the region’s sovereign debt crisis, Italy prime ministers decision to step down and the eminent bankruptcy filed by NY based MF Global.

Asian shares are also seen trading in the red this morning, tracking negative cues from the Wall Street, with resources and materials shares among the top decliners. In major global news, 200 year old bank MF Global Holdings Ltd. on Monday filed one of the nation’s largest bankruptcy cases after suffering big losses on risky debt investments. The company had earlier reported a quarterly loss USD 191.6 million and had its credit ratings downgraded by Moody’s and Fitch to junk class.

Back home, eight core industries performed below par in September, resulting in a disappointing industrial growth. The eight crucial sectors, having a weight of almost 38 per cent in the IIP, grew by just 2.3 per cent in September 2011 as against 3.3 in the corresponding month last year — the lowest in two-and-a-half years.

The latest set of data implies that the rest of the sectors in IIP will have to put up an extremely good show in September to push up industrial growth, which continued to be at below 5 per cent for the second month in a row in August. While consumer durable sectors are anyway facing the brunt of high interest rates, the capital goods sector is highly volatile.

We also advise our readers to watch out for the auto and cement sales numbers expected this week as it will provide valuable insight on their next quarter’s expected performance.

In conclusion, we expect the markets to remain negative for the day tracking cues from the global markets. Nevertheless we shall update our readers on a timely basis on the expected direction of the markets.

Corporate News

HUL stock leaped 7.4 per cent as the company reported significantly better than expected performance in the second quarter across all three main parameters — sales, operating profit and net profit. Total operating income rose 17.7 per cent year-on-year (y-o-y) to Rs 5,610 crore led by value and volume growth, especially in its soaps and detergents business (S&D), which contributes 45 per cent to overall revenues. Operating profit margin jumped 115 basis points (bps) to 14.7 per cent largely due to price rise. A 22.6 per cent growth in net profit after adjusting for extra ordinary gains led to 46 bps increase y-o-y in net profit margin compared to decline seen in most of the past several quarters. T he management also declared an interim dividend of Rs 3.5 per share, which is 350 per cent over its Rs 1 face value.

State-owned NMDC today posted a net profit of Rs 1,963.1 crore for the quarter ended September 30, 2011, up 42% over same period last fiscal. Total income has increased to Rs 3,565.2 crore for the quarter from Rs 2,705.9 crore for the quarter ended September 30, 2010. The excellent set of numbers was attributed to higher sales volumes, stable costs and steep rise in other income. The board also declared an interim dividend of Re 1 for equity share for the fiscal. The board added that the process had been initiated to sell the plant and machinery of Silica Sand project of Lalapur and UPFO plant Visakhapatnam.

After a one-off reduction, state-owned oil companies today hiked jet fuel prices by a steep 3.8% in line. The price of aviation turbine fuel (ATF), or jet fuel, at Delhi's T3 airport was raised by Rs 2,845 per kilolitre (kl), or 3.8%, to Rs 61,115 per kl with effect from midnight tonight, an official of Indian Oil Corporation (IOC), said. ATF in Mumbai, home to the nation's busiest airport, will cost Rs 2,950 per kl more at Rs 61,984 per kl from tomorrow as against the old price of Rs 59,021 per kl. Jet fuel makes up for 40% of an airlines' operating cost and the steep hike in prices will raise burden on the cash-strapped airlines. One may expect some positive movement in OMC prices and negative movement in aviation stocks.

Drug maker Sun Pharmaceutical has received approval from the USFDA to market generic Diltiazem HCl extended-release capsules used for treating hypertension and angina in the American market. These Diltiazem HCl extended release capsules are generic equivalent to Valeant International's Cardizem CD capsules in the strengths of 20 mg, 180 mg, 240 mg, 300 mg and 360 mg, it added. The company believes that the annual sale in the US for these strengths is approximately USD 300 million. Diltiazem HCl extended-release capsules are indicated for the treatment of hypertension and for the management of angina.

Greenply Industries today reported over six fold jump in its net profit to Rs 10.10 crore for the second quarter ended September 30, 2011, over the same period previous fiscal. The company had posted a net profit of Rs 1.58 crore for the same period last financial year. Net sales of the company for the second quarter ended September 30, 2011 stood at Rs 413.48 crore, as against Rs 288.72 crore for the same period last fiscal.

RIL plans to invest up to USD 2.338 billion to produce about 15 million standard cubic meters per day of gas from the R-Series gas field in its eastern offshore Krishna Godavari D6 block. The Dhirubhai-34 discovery, known as the R-Series field, has gross in-place gas reserves of 1.64 trillion cubic feet, which, according to Reliance, can be brought into production in four-five years, sources privy to the development said.

Indian oil explorer Bharat Petroleum Corporation Ltd (BPCL) today posted a net loss of Rs 3,229 crore for the second quarter ended September, 2011. The oil PSU had posted a net profit of Rs 2,142 crore in the corresponding quarter last year. During the quarter, net sales increased 19.40% to Rs 42,282 crore as compared to Rs 35,416 crore in the same quarter last year. The results for the quarter has been adversely affected due to impact on account of high crude oil and product prices which could not be fully passed on to consumers.

NHPC has planed to add only 515 Mw of power capacity in the current financial year which is almost half of the target they had set for the year, at 1,080 Mw. This is due to some political issues, and some other geological issues. Work had come to a standstill at some projects due to the ongoing Gorkhaland issue. Unexpected floods in Sikkim, too, created geological pressures on the progress of work.